Standard & Poor's provided a little more anecdotal evidence that the U.S. economy is on the comeback trail.
Despite the concerning jump in oil prices, S&P said that U.S. corporate dividend increases surged 27.8% in the first quarter.
For investors, particularly those counting on supplemental income in their retirement, the increase amounted to a $19 billion raise for the first three months of the year as 510 publicly traded companies bumped up their quarterly dividend payment.
"If dividends were a paycheck, dividend investors would have received a 6.7% raise in the first quarter," Howard Silverblatt, senior index analyst at S&P Indices, said in the report. "On a dollar basis, dividend investors lost $43.8 billion in the first quarter of 2009; for the first quarter of 2011 they added back $19 billion."
This relative strength of companies across a variety of industries combined with word that the nation's unemployment rate in March fell to a two-year low of 8.8% suggests that investors have good reason to move their cash off the sidelines and resume investing for both short- and near-term goals.
Last month, Chicago-based affluent investor consultant Spectrem Group served up a report that found American retirement assets increased to more than $10.2 trillion by the end of 2010, up 10% from the $9.3 trillion they had invested at the close of 2009.
The S&P report found that only 30 companies decreased their dividend payment in the first quarter compared to 48 who scaled back their payouts a year earlier.
In the report, Silverblatt said individual investors saved $274 billion on qualified dividend tax cuts from 2003 through 2010, giving them even more investment income.
"The two-year extension of the lower dividend tax rate will add another $74 billion directly into the hands of investors, with a portion of it going back into the market via reinvestment programs, thereby supporting stock prices," he said.
The trend of higher dividend payments is expected to continue through the rest of 2011 despite unrest in some parts of the Middle East and increasing oil and fuel prices.
"We expect to see dividend increases across the board in 2011 as companies continue to demonstrate to investors that they are well into recovery mode," Silverblatt said. "In addition, if the economy continues to improve and home and commercial real estate portfolios don't deteriorate, we could see a second round of dividend increases for financials late in the year, with the increased payment being made in the first quarter of 2012."
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